The negotiations, which were blocked last week by Communist protesters, follow intense pressure from debt-crippled Greece's international bailout creditors for new labor reforms to boost the country's lagging competitiveness.

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Senior debt inspectors from the European Commission, the European Central Bank and the International Monetary Fund - known as the troika - are in Athens to discuss reforms and cutbacks. Late Tuesday, the Greek Parliament approved a series of new measures demanded by the troika, including provisions to open up closed professions and easier payment schemes to help businesses settle mounting tax debts.

But even though the new government is a coalition made up of three parties and holds an overwhelming majority in Parliament it failed to push through one clause of the bill. Lawmakers rejected a proposal to deregulate pharmacy opening hours, with 101 voting in favor, 65 against and 87 abstentions.

The government has warned that if the talks on labor reform prove fruitless it could impose wage cuts by law. Prime Minister Lucas Papademos said failure to address the issue could disrupt Greece's international cash lifeline, precipitating a bankruptcy in March and Greece's exit from the 17-nation eurozone.

Greece is in a fourth year of deep recession, with near-record unemployment.

The country's main GSEE labor union has ruled out any cut in the euro751 ($977) minimum monthly salary, which the SEV employers' federation has also said it wants to avoid. Other potential reforms include suspending automatic salary increases, reducing social security contributions and abolishing or trimming holiday pay known as the 13th and 14th salaries.

Many companies have already forced employees to accept salary cuts to avoid broad-scale layoffs, while workers' income has been sapped by a spate of tax hikes since the European debt crisis began in 2009.

The extra two salaries per year have been slashed in the public sector as part of austerity measures imposed in return for Greece's first, euro110 billion ($143 billion) bailout it started receiving from its European partners and the International Monetary Fund in May 2010.

A second bailout, worth another euro130 billion ($169 billion), was agreed upon in October but has not yet been finalized when it was clear the first bailout was not enough. A key part of that deal is a bond swap involving an estimated euro100 billion ($130 billion) writedown in Greece's privately held debt.

But crucial talks with the country's private creditors have faltered over the past few days, and on Tuesday finance ministers of the 17 countries that use the euro adopted a tough stance on the interest rate the new bonds will carry.

The ministers called for an average rate of less than 3.5 percent for the period until 2020. That is below the more than 4 percent average demanded by the Institute of International Finance, which is leading negotiations for the private bondholders.

A person close to the key bondholders said they were meeting in Paris on Wednesday to discuss how and whether to continue the talks. The person, who spoke on condition of anonymity because of the sensitivity of the issue, said the steering committee of the IIF is meeting "to really take stock" of the situation.

If the investors decide against moving ahead with talks for a voluntary deal, the eurozone would face a stark choice between a forced default for Greece or new aid payments to the country.

On Wednesday, about 100 members of a Communist-backed labor union protested peacefully outside the Athens hotel where the troika officials are staying, holding a banner that read: "Troika get out of Greece." The same union had blocked the labor reform talks last week.